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long-run growth trend over shorter periods."},{"text":"Permanent long-run increases","correct":false,"explanation":"This describes economic growth rather than the trade cycle. The trade cycle concerns recurring short-run fluctuations of real GDP around its long-run trend."},{"text":"Changes in the general price level","correct":false,"explanation":"Changes in the general price level describe inflation. The trade cycle measures recurring short-run fluctuations of real GDP around its long-run growth trend."},{"text":"Annual changes in the balance of trade","correct":false,"explanation":"The balance of trade records exports minus imports, not overall economic fluctuations. The trade cycle concerns recurring short-run changes in real GDP."}]},{"id":"0c11f3d8-aade-42e0-952c-617d6416ef89","cardType":"basic","points":1,"front":"What does measuring real GDP at constant prices remove?","back":"The effect of inflation.","mcqOptions":[{"text":"The effect of inflation.","correct":true,"explanation":"Using constant prices removes price changes from GDP figures, allowing changes in actual production to be measured accurately."},{"text":"The effect of unemployment.","correct":false,"explanation":"Unemployment is not removed by using constant prices. The method removes inflation so GDP changes reflect variations in real output."},{"text":"The effect of interest rates.","correct":false,"explanation":"Interest rates are not directly removed from GDP calculations. Constant prices adjust for inflation to isolate changes in the volume of output."},{"text":"The effect of population growth.","correct":false,"explanation":"Population growth is not a price effect and remains relevant to total GDP. Constant-price GDP specifically removes inflation."}]},{"id":"881d2316-2d47-4e38-b0b1-a7d267e2e0f0","cardType":"basic","points":3,"front":"What are the four phases of the trade cycle?","back":"

Boom
Downturn
Recession
Recovery

","mcqOptions":[{"text":"

Boom
Downturn
Recession
Recovery

","correct":true,"explanation":"These are the four commonly identified phases: strong expansion, weakening momentum, falling output, and renewed growth."},{"text":"

Expansion
Peak
Contraction
Trough

","correct":false,"explanation":"These are alternative descriptions used in some models, but this syllabus identifies the phases as boom, downturn, recession, and recovery."},{"text":"

Inflation
Stagflation
Deflation
Disinflation

","correct":false,"explanation":"These terms describe changes in prices, not phases of economic activity. The trade cycle phases concern output and its rate of change."},{"text":"

Growth
Stability
Decline
Recovery

","correct":false,"explanation":"This list is too general and omits the specific trade-cycle phases. The recognised sequence includes boom, downturn, recession, and recovery."}]},{"id":"ac007941-2a0f-4136-939b-d23667079c65","cardType":"basic","points":2,"front":"Why can a downturn occur even when the long-run trend is upward?","back":"Real output can fall temporarily while the long-run trend continues rising.","mcqOptions":[{"text":"Real output can fall temporarily while the long-run trend continues rising.","correct":true,"explanation":"Short-run output can decrease relative to the previous period even while productivity, capacity, and the long-run trend continue increasing."},{"text":"Real output can rise permanently while the long-run trend stops increasing.","correct":false,"explanation":"A downturn concerns weakening short-run performance, not permanent output increases. Output can fall temporarily while the long-run trend continues rising."},{"text":"Nominal output can fall temporarily while the long-run trend continues rising.","correct":false,"explanation":"The trade cycle is assessed using real output, which removes inflation. Nominal GDP may change because of prices rather than production."},{"text":"Real output can remain constant indefinitely while the long-run trend continues rising.","correct":false,"explanation":"A downturn is associated with weakening or falling short-run output, not indefinite stagnation. Real output can fall temporarily despite an upward trend."}]},{"id":"687cc8fd-08aa-43bc-bd76-2a58948c4b1c","cardType":"cloze","points":null,"front":"The trade cycle shows recurring short-run fluctuations in [ ] around its long-run growth trend.","back":"The trade cycle shows recurring short-run fluctuations in real GDP around its long-run growth trend.","mcqOptions":[{"text":"real GDP","correct":true,"explanation":"Real GDP measures the economy’s output after allowing for price changes, and the trade cycle tracks its short-run fluctuations around trend growth."},{"text":"nominal GDP","correct":false,"explanation":"Nominal GDP includes the effect of changing prices. The trade cycle uses real GDP to measure changes in actual output."},{"text":"the price level","correct":false,"explanation":"The price level measures average prices rather than production. Trade-cycle fluctuations refer to movements in real GDP around its trend."},{"text":"the balance of payments","correct":false,"explanation":"The balance of payments records transactions between a country and the rest of the world. The trade cycle concerns domestic real GDP fluctuations."}]},{"id":"6945cd39-778d-48fd-88fb-dd284d95835a","cardType":"basic","points":1,"front":"What happens to real GDP during a boom?","back":"It grows rapidly, at or above the trend rate.","mcqOptions":[{"text":"It grows rapidly, at or above the trend rate.","correct":true,"explanation":"During a boom, real GDP expands strongly, with growth at or above the economy’s underlying long-run trend rate."},{"text":"It grows slowly, below the trend rate.","correct":false,"explanation":"Growth below trend is characteristic of a slowdown or downturn. A boom involves rapid real GDP growth at or above trend."},{"text":"It falls steadily, below the trend rate.","correct":false,"explanation":"Steady falling real GDP indicates contraction or recession. A boom is a period of rapid expansion rather than declining output."},{"text":"It remains constant, at the trend rate.","correct":false,"explanation":"Constant output means zero growth, which does not describe a boom. Booms involve rapid growth at or above the trend rate."}]},{"id":"102cd015-040b-4e90-87ce-7dcef220ff95","cardType":"basic","points":2,"front":"Why is unemployment usually low during a boom?","back":"The economy is operating at or near full capacity, increasing demand for workers.","mcqOptions":[{"text":"The economy is operating at or near full capacity, increasing demand for workers.","correct":true,"explanation":"Strong demand raises production and employment, so firms use most available resources and unemployment tends to be low near full capacity."},{"text":"The economy is operating well below full capacity, reducing demand for workers.","correct":false,"explanation":"Operating below capacity usually leaves spare resources and weaker labour demand. Booms typically increase employment as firms expand production."},{"text":"The economy is operating at or near full capacity, reducing demand for workers.","correct":false,"explanation":"Near full capacity creates pressure for additional labour, not less demand. Firms generally recruit more workers to meet strong demand."},{"text":"The economy is operating well below full capacity, increasing demand for workers.","correct":false,"explanation":"Weak capacity utilisation normally reduces the need for workers. Low unemployment during a boom reflects strong demand and near-full capacity."}]},{"id":"a67eb6ee-7d9a-485a-9ae3-9addf881fa53","cardType":"basic","points":3,"front":"How do confidence and low unemployment reinforce a boom?","back":"

Households consume more.
Firms invest more.
Extra spending reinforces the expansion.

","mcqOptions":[{"text":"

Households consume more.
Firms invest more.
Extra spending reinforces the expansion.

","correct":true,"explanation":"Confidence encourages household consumption and business investment, raising aggregate demand and reinforcing the existing expansion."},{"text":"

Households consume less.
Firms invest less.
Extra spending reinforces the expansion.

","correct":false,"explanation":"Lower consumption and investment reduce aggregate demand rather than reinforcing expansion. Confidence during a boom normally encourages both forms of spending."},{"text":"

Households consume more.
Firms invest less.
Extra saving reinforces the contraction.

","correct":false,"explanation":"Reduced investment, extra saving, and contraction describe weakening demand. A boom is reinforced when consumption and investment increase together."},{"text":"

Households save more.
Firms invest more.
Extra spending reinforces the expansion.

","correct":false,"explanation":"Higher saving means less current consumption, weakening the spending multiplier. Confidence supports expansion through increased consumption as well as investment."}]},{"id":"881577a8-463a-4642-b108-62be008a2b13","cardType":"cloze","points":null,"front":"During a boom, households consume more and firms [ ], reinforcing the expansion.","back":"During a boom, households consume more and firms invest more, reinforcing the expansion.","mcqOptions":[{"text":"invest more","correct":true,"explanation":"Strong confidence and expected sales encourage firms to increase capital spending, adding to aggregate demand and reinforcing the boom."},{"text":"save more","correct":false,"explanation":"Firms do not usually describe retained funds as saving in this relationship. The relevant boom response is increased investment in productive capacity."},{"text":"export less","correct":false,"explanation":"Exports depend on foreign demand and competitiveness, not necessarily domestic confidence. Firms investing more is the mechanism reinforcing the expansion."},{"text":"produce less","correct":false,"explanation":"Reducing production would weaken the expansion and conflict with strong demand. Firms typically invest more when they expect continued high sales."}]},{"id":"eb6df77b-c751-40b7-9b8f-bcaaa3edd6a5","cardType":"basic","points":2,"front":"Why do wages rise as a boom approaches full capacity?","back":"Firms compete for scarce workers, bidding up wages.","mcqOptions":[{"text":"Firms compete for scarce workers, bidding up wages.","correct":true,"explanation":"Near full capacity, suitable workers become harder to recruit. Firms raise wages to attract and retain labour, creating upward wage pressure."},{"text":"Firms compete for surplus workers, bidding up wages.","correct":false,"explanation":"A surplus of workers generally weakens employees’ bargaining power and limits wage growth. Wage pressure rises when labour becomes scarce."},{"text":"Workers compete for scarce firms, bidding up wages.","correct":false,"explanation":"Wage competition mainly comes from firms seeking limited labour, not workers seeking scarce firms. Strong labour demand pushes wages upwards."},{"text":"Firms compete for cheap imports, bidding up wages.","correct":false,"explanation":"Import prices do not explain this labour-market mechanism. Wages rise because firms compete for scarce workers as spare capacity disappears."}]},{"id":"f7319838-3b9e-414d-9af9-0526513ba06e","cardType":"basic","points":1,"front":"What type of inflation can result when a boom removes spare capacity?","back":"Demand-pull inflation.","mcqOptions":[{"text":"Demand-pull inflation.","correct":true,"explanation":"When spare capacity is exhausted, stronger aggregate demand puts upward pressure on output prices and wages, producing demand-pull inflation."},{"text":"Cost-push inflation.","correct":false,"explanation":"Cost-push inflation results from rising production costs, such as energy or wages independently of excess demand. A demand-led boom causes demand-pull inflation."},{"text":"Imported inflation.","correct":false,"explanation":"Imported inflation arises when import prices or exchange-rate movements raise domestic costs. Removing spare capacity creates demand-pull pressure instead."},{"text":"Deflation.","correct":false,"explanation":"Deflation is a sustained fall in the general price level. Strong demand approaching full capacity is more likely to generate demand-pull inflation."}]},{"id":"f455c77e-451d-43f9-bc43-78acf10c8524","cardType":"basic","points":2,"front":"What is likely to happen if CPI inflation rises above the $2\\%$ target during a boom?","back":"The MPC is likely to raise Bank Rate to cool demand.","mcqOptions":[{"text":"The MPC is likely to raise Bank Rate to cool demand.","correct":true,"explanation":"A rate rise makes borrowing less attractive and saving more attractive, reducing aggregate demand and helping return inflation towards the target."},{"text":"The MPC is likely to cut Bank Rate to cool demand.","correct":false,"explanation":"Cutting Bank Rate usually encourages borrowing and spending, increasing demand. Raising Bank Rate is the contractionary response to above-target inflation."},{"text":"The MPC is likely to raise Bank Rate to increase demand.","correct":false,"explanation":"Higher borrowing costs generally reduce consumption and investment rather than increasing demand. The purpose is to cool demand and inflation."},{"text":"The MPC is likely to freeze Bank Rate to cool demand.","correct":false,"explanation":"Leaving rates unchanged may not reduce excess demand. When inflation is persistently above target, the MPC may raise Bank Rate."}]},{"id":"546d796c-ae77-43b3-b5bf-fa19e7586103","cardType":"basic","points":1,"front":"What is a slowdown?","back":"A fall in the rate of growth while growth remains positive.","mcqOptions":[{"text":"A fall in the rate of growth while growth remains positive.","correct":true,"explanation":"A slowdown means output is still increasing, but its percentage growth rate has decreased compared with the earlier period."},{"text":"A fall in the level of output for two consecutive quarters.","correct":false,"explanation":"Falling output for two consecutive quarters defines a recession. A slowdown has positive growth, although the growth rate becomes lower."},{"text":"A rise in the rate of inflation while growth remains positive.","correct":false,"explanation":"That describes accelerating inflation, not a change in economic growth. A slowdown concerns a lower rate of real GDP growth."},{"text":"A fall in the rate of growth while growth becomes negative.","correct":false,"explanation":"Once growth becomes negative, the economy is contracting rather than merely slowing. A slowdown retains positive growth despite weaker momentum."}]},{"id":"0a86b94b-2e22-4131-8c43-6550b588898d","cardType":"cloze","points":null,"front":"In a slowdown, output still [ ], but at a slower rate.","back":"In a slowdown, output still rises, but at a slower rate.","mcqOptions":[{"text":"rises","correct":true,"explanation":"In a slowdown, real output continues to increase, but the percentage rate of growth is lower than previously."},{"text":"falls","correct":false,"explanation":"Falling output indicates negative growth and may contribute to a recession. A slowdown still has rising output, but at a reduced rate."},{"text":"stagnates","correct":false,"explanation":"Stagnation implies little or no growth, whereas a slowdown still involves positive growth. The output level continues to rise more slowly."},{"text":"accelerates","correct":false,"explanation":"Accelerating output means the growth rate is increasing, which is the opposite of a slowdown. A slowdown has positive but weaker growth."}]},{"id":"7b5f399c-d8a2-4d7a-855e-7ece5e8dd539","cardType":"basic","points":1,"front":"What is a recession?","back":"A fall in real GDP for two consecutive quarters.","mcqOptions":[{"text":"A fall in real GDP for two consecutive quarters.","correct":true,"explanation":"The standard technical definition of recession used here is negative real GDP growth across two successive quarters."},{"text":"A fall in real GDP for one consecutive quarter.","correct":false,"explanation":"One quarter of falling real GDP indicates contraction but does not meet the stated technical definition. Recession requires two consecutive quarters."},{"text":"A fall in nominal GDP for two consecutive quarters.","correct":false,"explanation":"Nominal GDP can fall because of changing prices as well as output. The definition uses real GDP to identify an actual contraction in production."},{"text":"A rise in real GDP for two consecutive quarters.","correct":false,"explanation":"Rising real GDP represents economic expansion, not recession. Recession requires real GDP to fall for two consecutive quarters."}]},{"id":"5332c912-7942-4c1c-aaca-49716723b674","cardType":"basic","points":3,"front":"How does a downturn differ from a recession?","back":"A downturn is a loss of momentum; a recession involves negative growth.","mcqOptions":[{"text":"A downturn is a loss of momentum; a recession involves negative growth.","correct":true,"explanation":"A downturn signals weakening growth or momentum, whereas a recession is more severe and involves falling real GDP, conventionally for two quarters."},{"text":"A downturn is a loss of output; a recession involves positive growth.","correct":false,"explanation":"Positive growth is inconsistent with recession, while a downturn need not mean output has already fallen. Recession involves negative growth."},{"text":"A downturn is a rise in momentum; a recession involves negative growth.","correct":false,"explanation":"A rise in momentum describes strengthening expansion, not a downturn. A downturn involves weakening momentum, while recession involves negative growth."},{"text":"A downturn is a loss of momentum; a recession involves zero growth.","correct":false,"explanation":"Zero growth means stagnation rather than falling output. A recession involves negative growth, conventionally defined as real GDP declining for two quarters."}]},{"id":"f5082025-41e1-4098-b9a3-2308c154ef27","cardType":"basic","points":3,"front":"What happens to unemployment and confidence during a recession?","back":"

Unemployment rises.
Confidence weakens.

","mcqOptions":[{"text":"

Unemployment rises.
Confidence weakens.

","correct":true,"explanation":"Falling demand causes firms to reduce production and employment. Job losses and weaker economic prospects then make households and businesses less confident about future income and profits."},{"text":"

Unemployment falls.
Confidence strengthens.

","correct":false,"explanation":"This describes conditions more typical of an economic recovery. During a recession, lower demand leads firms to cut employment, so unemployment rises and confidence weakens."},{"text":"

Unemployment rises.
Confidence strengthens.

","correct":false,"explanation":"Although unemployment normally rises as firms reduce output, worsening job prospects and falling profits do not strengthen confidence. During a recession, confidence weakens alongside rising unemployment."},{"text":"

Unemployment falls.
Confidence weakens.

","correct":false,"explanation":"Confidence does weaken because households and firms expect poorer economic conditions, but unemployment does not normally fall. Reduced production lowers labour demand, causing unemployment to rise."}]},{"id":"987edbb4-27b2-47f1-8cb3-a24eeb8d1959","cardType":"basic","points":2,"front":"Why does inflationary pressure ease during a recession?","back":"Total spending falls, reducing pressure on prices.","mcqOptions":[{"text":"Total spending falls, reducing pressure on prices.","correct":true,"explanation":"A recession reduces aggregate demand as household consumption, investment and other spending weaken. Firms consequently face less scope to raise prices, easing demand-pull inflationary pressure."},{"text":"Total spending rises, reducing pressure on prices.","correct":false,"explanation":"Rising total spending would generally increase demand-pull pressure rather than reduce it. In a recession, total spending falls, leaving firms with weaker demand and less pricing power."},{"text":"Total spending stabilises, reducing pressure on prices.","correct":false,"explanation":"Merely stable spending does not explain the cyclical easing of inflationary pressure. During a recession, total spending falls, creating spare capacity and reducing firms’ ability to increase prices."},{"text":"Total spending accelerates, reducing pressure on prices.","correct":false,"explanation":"Faster spending growth is associated with stronger inflationary pressure, particularly near full capacity. Recessionary inflation pressure eases because total spending falls and excess capacity increases."}]},{"id":"6f585e01-95f9-4847-bcb7-ec29c78b7a4a","cardType":"cloze","points":null,"front":"A recession is defined as two consecutive quarters of [ ].","back":"A recession is defined as two consecutive quarters of negative economic growth.","mcqOptions":[{"text":"negative economic growth","correct":true,"explanation":"A technical recession occurs when real GDP contracts for two successive quarters. Each quarter therefore records negative economic growth compared with the preceding quarter."},{"text":"rising unemployment","correct":false,"explanation":"Unemployment often rises during a recession, but it is not part of the technical definition. The required condition is negative economic growth for two consecutive quarters."},{"text":"falling price levels","correct":false,"explanation":"Deflation can occur during weak economic activity, but recessions do not require the general price level to fall. They are defined by two consecutive quarters of negative economic growth."},{"text":"below-trend growth","correct":false,"explanation":"Growth below its long-run trend can still be positive, so it does not necessarily indicate a recession. The technical definition requires negative economic growth in two consecutive quarters."}]},{"id":"0459806e-f0a8-4dd4-bec2-41be40a841ee","cardType":"basic","points":2,"front":"What happens to investment during a recession, and why?","back":"Investment weakens because confidence falls.","mcqOptions":[{"text":"Investment weakens because confidence falls.","correct":true,"explanation":"Lower confidence makes firms less optimistic about future sales and profits. They therefore postpone or cancel capital spending, causing investment to weaken during a recession."},{"text":"Investment strengthens because confidence falls.","correct":false,"explanation":"Falling confidence discourages rather than encourages capital expenditure because firms expect weaker future demand and returns. Investment therefore weakens during a recession."},{"text":"Investment weakens because confidence rises.","correct":false,"explanation":"Rising business confidence would normally encourage firms to invest by improving expected returns. In a recession, investment weakens because confidence falls and expected demand deteriorates."},{"text":"Investment strengthens because confidence rises.","correct":false,"explanation":"This combination is characteristic of recovery or expansion, when optimistic firms increase capital expenditure. During a recession, confidence falls, so investment weakens."}]},{"id":"af3b5f9a-694f-4550-8248-3e7a0ab724b7","cardType":"basic","points":1,"front":"What is recovery in the trade cycle?","back":"The phase after a trough when real GDP rises towards its long-run trend.","mcqOptions":[{"text":"The phase after a trough when real GDP rises towards its long-run trend.","correct":true,"explanation":"Recovery begins after the trade cycle reaches its lowest point. Economic activity expands, and real GDP moves back towards the economy’s long-run trend level."},{"text":"The phase after a peak when real GDP falls below its long-run trend.","correct":false,"explanation":"This describes the movement into a downturn or recession after the cycle peaks. Recovery instead follows a trough, with real GDP rising towards its long-run trend."},{"text":"The phase before a trough when real GDP falls from its long-run trend.","correct":false,"explanation":"The period before a trough is the contractionary phase, as output is still declining. Recovery starts after the trough, when real GDP rises towards its long-run trend."},{"text":"The phase after a trough when real GDP rises above its productive capacity.","correct":false,"explanation":"Recovery does not require output to exceed productive capacity, which would indicate overheating. It is the post-trough phase when real GDP rises towards its long-run trend."}]},{"id":"5bcf54b0-66ef-4301-914f-de29b24dbd55","cardType":"basic","points":2,"front":"Why does unemployment begin to fall during a recovery?","back":"Returning confidence and spending increase real output and labour demand.","mcqOptions":[{"text":"Returning confidence and spending increase real output and labour demand.","correct":true,"explanation":"As confidence and expenditure recover, firms sell more and expand real production. Producing additional output requires more workers, so labour demand rises and unemployment begins to fall."},{"text":"Returning confidence and spending decrease real output and labour demand.","correct":false,"explanation":"Improving confidence and spending raise rather than reduce firms’ sales and production. Real output and labour demand therefore increase during recovery, causing unemployment to begin falling."},{"text":"Returning confidence and spending increase labour costs and labour demand.","correct":false,"explanation":"Higher labour costs do not explain why firms employ more workers and may discourage hiring. Recovery raises real output, which increases firms’ derived demand for labour."},{"text":"Returning confidence and spending increase unemployment and labour demand.","correct":false,"explanation":"Higher labour demand reduces unemployment rather than increasing it. Returning confidence and spending raise real output, prompting firms to hire more workers during the recovery."}]},{"id":"15505a2e-e535-42b7-8087-8ca6749b1ffc","cardType":"basic","points":3,"front":"What are two benefits of a boom for an economy?","back":"

Low unemployment and rising real incomes improve living standards.
Strong profits raise government tax revenue.

","mcqOptions":[{"text":"

Low unemployment and rising real incomes improve living standards.
Strong profits raise government tax revenue.

","correct":true,"explanation":"A boom creates jobs and can increase households’ purchasing power, improving material living standards. Higher company profits and incomes also expand the government’s tax receipts."},{"text":"

High unemployment and falling real incomes improve living standards.
Weak profits raise government tax revenue.

","correct":false,"explanation":"High unemployment and falling real incomes reduce living standards, while weak profits shrink corporation tax receipts. A boom instead brings low unemployment, rising real incomes and stronger government tax revenue."},{"text":"

Low unemployment and falling real incomes improve living standards.
Strong profits reduce government tax revenue.

","correct":false,"explanation":"Falling real incomes would weaken purchasing power, and stronger profits normally increase rather than reduce tax receipts. Boom benefits include rising real incomes and higher government tax revenue."},{"text":"

High unemployment and rising real incomes improve living standards.
Strong profits reduce government tax revenue.

","correct":false,"explanation":"Booms generally reduce unemployment as firms expand production, and strong profits increase taxable income. The benefits are low unemployment with rising real incomes and higher government tax revenue."}]},{"id":"d21fd8d3-bf46-4c8e-86b7-e389c434f0d1","cardType":"basic","points":3,"front":"How can an overheating boom damage the economy?","back":"

It creates demand-pull inflation.
Higher incomes increase imports, widening the current account deficit.
It adds to pollution and congestion.

","mcqOptions":[{"text":"

It creates demand-pull inflation.
Higher incomes increase imports, widening the current account deficit.
It adds to pollution and congestion.

","correct":true,"explanation":"Excess aggregate demand raises prices, while higher incomes increase spending on imports and can worsen the current account. Greater production and travel also impose environmental and congestion costs."},{"text":"

It creates cost-push deflation.
Higher incomes reduce imports, narrowing the current account deficit.
It reduces pollution and congestion.

","correct":false,"explanation":"An overheating boom raises demand-pull inflation rather than causing deflation. Higher incomes tend to increase imports and widen the current account deficit, while greater activity adds to pollution and congestion."},{"text":"

It creates demand-pull inflation.
Higher incomes increase exports, widening the current account surplus.
It reduces pollution and congestion.

","correct":false,"explanation":"The inflation effect is correct, but higher domestic incomes chiefly raise imports rather than exports, potentially widening a current account deficit. Increased economic activity also adds to pollution and congestion."},{"text":"

It creates cost-push inflation.
Higher incomes increase imports, widening the current account surplus.
It adds to pollution and congestion.

","correct":false,"explanation":"Overheating primarily generates demand-pull inflation through excess spending, not cost-push inflation. More imports are debits on the current account, so they widen a deficit rather than a surplus."}]},{"id":"7315017c-a979-45da-8f9b-6b8a7660b222","cardType":"cloze","points":null,"front":"A boom is desirable when growth is near trend, but an unsustainable boom may sow the seeds of the next [ ].","back":"A boom is desirable when growth is near trend, but an unsustainable boom may sow the seeds of the next recession.","mcqOptions":[{"text":"recession","correct":true,"explanation":"An unsustainable boom can create inflation, excessive borrowing and policy tightening. These pressures may eventually reduce demand and output, causing the economy to enter a recession."},{"text":"recovery","correct":false,"explanation":"Recovery is the expansion following a trough, not the likely correction after an unsustainable boom. Overheating and subsequent policy tightening may instead trigger the next recession."},{"text":"upswing","correct":false,"explanation":"An upswing describes rising economic activity and is already represented by the boom. Unsustainable demand growth can produce imbalances and tightening that lead to the next recession."},{"text":"equilibrium","correct":false,"explanation":"Equilibrium is not the contractionary phase that may follow an overheated expansion. An unsustainable boom can generate imbalances whose correction causes the next recession."}]}]}],"examCountdown":{"examDate":"2027-05-10","paperLabel":"Paper 1"},"heading":"2.5.3 Trade (business) cycle","title":"2.5.3 Trade (business) cycle Flashcards","topbar":{"backHref":"/a-level/economics/edexcel/a/flashcards"},"topicSidebar":"$L38"}]}],"topicId":"cd64ad5d-ccf3-5f5e-82e5-d44f0d2e2f51","walled":"$L39"}],"$L3a","$L3b"]